Did World War III Start on the Precise Day of the ECM?

Martin Armstrong on his blog about 2015.75 and one particular political decision: „Russia began bombing CIA-trained rebels in Syria precisely on the day of the turn in the Economic Confidence Model. As CNN pointed out, the bombing continues. Now, hundreds of Iranian troops have arrived in Syria to join a major ground offensive in support of President Bashar al-Assad’s government.

Clearly, the civil war in Syria is escalating. We will see this unfold as a proxy war directly between U.S. and Russia with China supporting the Russian side in this game. This conflict is turning regional and global in scope by drawing in the world powers all because the U.S. war machine thinks this is a game. […] This should be of great concern because historically, whatever unfolds on the precise day of the ECM, becomes an important event.“ Read the whole article on Martin Armstrongs Blog.

Greek Debt Crisis is the Iraq War of Finance

„Rarely in modern times have we witnessed such a display of petulance and bad judgment by those supposed to be in charge of global financial stability, and by those who set the tone for the Western world. The spectacle is astonishing. The European Central Bank, the EMU bail-out fund, and the International Monetary Fund, among others, are lashing out in fury against an elected government that refuses to do what it is told. […]

If we want to date the moment when the Atlantic liberal order lost its authority – and when the European Project ceased to be a motivating historic force – this may well be it. In a sense, the Greek crisis is the financial equivalent of the Iraq War, totemic for the Left, and for Souverainistes on the Right, and replete with its own “sexed up” dossiers.

Does anybody dispute that the ECB – via the Bank of Greece – is actively inciting a bank run in a country where it is also the banking regulator by issuing this report on Wednesday?“ Lesen sie die gesamte Analyste von Ambrose Evans-Pritchard beim englischen The Telegraph.

Die Zukunft der bargeldlosen Gesellschaft

Martin Armstrong schreibt auf seinem Blog über die Pläne zur Abschaffung des Bargeldes: „I doubt that the USA will be able to move to a cashless society as easily as Europe. The dollar is used around the world and cancelling that outstanding money supply would bring tremendous international unrest. Additionally, the USA is not in crisis financially, as is the case in Europe. […]

Europe, […], has an entirely different problem. The failure to have consolidated the debts of member states meant that the reserves of the banks were constituted from a politically correct mixture of debt. Instead of fixing the problem, politicians who are lawyers always move one-step forward with laws. To them the logical solution is to eliminate cash to protect banks from a panic run that would collapse Europe and take Brussels with it.

This is now a deliberate marketing campaign. I know how these things work and pay attention. They are selling this idea everywhere and that is the preparation for the inevitable action. “ Lesen Sie den gesamten Forecast auf Armstrong Economics.

The Great Unraveling of Globalization

„Somewhat surprisingly, cross-border capital flows are equally anemic. Despite the common perception that multinationals these days manufacture their products anywhere but the West, global foreign direct investment (which reflects the amount that companies earmark for doing business in other countries) has fallen to a mere 2 percent of global GDP from 4 percent before the recession.“ More on how globalization is giving way to „reshoring“ and „localization“ in the Washington Post.

Debt Supercycle, Not Secular Stagnation

„In sum, the case for describing the world as being in a debt supercycle is both theoretically and empirically compelling. The case for secular stagnation is far thinner. It is always very difficult to predict long-run future growth trends, and although there are some headwinds, technological progress seems at least as likely to outperform over the next two decades as it is to exhibit a sharp slowdown. […]

The US appears to be near the tail end of its leverage cycle, Europe is still deleveraging, while China may be nearing the downside of a leverage cycle. Though many factors are at work, the view that we have lived through a debt supercycle, marked by a severe financial crisis, is far more constructive for policy analysis than the view that the world is suffering from long-term secular stagnation due to a chronic shortfall of demand.“ Read the full column of Kenneth Rogoff on VoxEU.org, the Centre for Economic Policy Research’s policy portal.

The Dollar’s the Only Real Game in Town

„The dollar’s the only real game in town […] Why is the DAX outperforming absolutely everything? Yet corporate profits are declining… It’s not that they think Germany’s fantastic, what they’re assuming is, the Euro is going to fail. If they buy German bonds and the German stock market, when the Euro breaks, they’ll get Deutsche Mark.“ Martin Armstrong in an interview on April 15, 2015

Offsetting Austerity

„European debtors did, in fact, need to tighten their belts — but the austerity they were actually forced to impose was incredibly savage. Meanwhile, Germany and other core economies — which needed to spend more, to offset belt-tightening in the periphery — also tried to spend less. The result was to create an environment in which reducing debt ratios was impossible: Real growth slowed to a crawl, inflation fell to almost nothing and outright deflation has taken hold in the worst-hit nations. […]

Nobody knows what happens next. Bookmakers are still giving better than even odds that Greece will stay in the euro. But if it doesn’t, I don’t believe the damage would stop there — a Greek exit is all too likely to threaten the whole currency project. […]“ Read the rest of Paul Krugman’s column „Nobody Understands Debt“ in the New York Times.

Let’s Just Admit It: Governments Never Really Pay Off Their Debts

„At the end of 2013, Greece owed upwards of €300 billion, or roughly 175% of GDP. It will never pay that debt in full and everyone knows it. […] Even if countries don’t stop making payments outright, inflation eats into the value of debts over time, alleviating the burden. The fact is, governments never really pay back all the money they borrow, at least not in real (i.e. inflation-adjusted) terms.“ Read more in the article on Quartz.

Deflation: The good, the bad and turning ugly

ECB: Capital Flight From Russia Has Hit $220bn

„The European Central Bank says capital flight from Russia since the Ukraine crisis erupted may be four times higher than admitted by the Kremlin, a clear sign that sanctions pressure is inflicting serious damage on the Russian economy. Mario Draghi, the ECB’s president, said the outflows from Russia have been large enough over recent weeks to push up the euro exchange rate, complicating monetary policy for the ECB. “We had very significant outflows that have been estimated by some to be in the order of €160bn out of Russia,” he said, without specifying where the information came from.“ Read the whole article at The Telegraph.

We Will Need Decades of Austerity, Not Years

„Government after government in almost every country in the world has piled up future commitments without setting aside any funds to meet those commitments. This is the characteristic of so-called pay-as-you-go pensions and health provision. The working generation goes to the ballot box to vote itself pensions and health entitlements without putting any money aside to meet these future obligations. Instead, the next generation of workers is expected to meet the cost, just as today’s elderly expected to receive their pensions and healthcare from the taxes of the working generation that followed.“ Read the rest of Philip Booth’s commentary in The Telegraph.

Christine Lagarde, Managing Director of the International Monetary Fund (IMF): „There is a palpable sense of optimism in some quarters that the European crisis is over. But can a crisis really be over when 12 percent of the labor force is without a job? When unemployment among the youth is in very high double digits, reaching more than 50 percent in Greece and Spain? […]

Growth has not been balanced across Europe and, therefore, may not be sustainable. There are pockets of stronger growth and high employment, for example in Germany, but growth is low or declining elsewhere. Most of the demand for European goods and services comes from abroad, not from within, leaving the economy at the mercy of the ups and downs of global trade.“ Read more about on why the danger has not passed in the Telegraph and the full text of Lagarde’s speech on the website of the IMF.

This American Life Explains the European Debt Crisis and the History of the Euro

„If you’re like us, when the words „European debt crisis“ pop up in the news you feel a little worried, and a little like taking a nap. Turns out, there’s a story behind this story. One that’s filled with guilt, and drama, and betrayal, and 100-year-old dreams come true. Alex Blumberg of Planet Money guest hosts. […]

Sovereign risk is an issue. That’s one of those phrases that sounds pretty innocuous and boring, but it hides something really dramatic. It means that for PIMCO, Greece went from being one of the countries that you don’t have to worry about to one that might not be able to pay its bills. When money managers worry about a country not paying its bills, things get very weird.“ Listen to the episode „Continental Breakup“ on This American Life.

Eurozone Crisis: Banks Agree 50% Reduction on Greece’s Debt

„Europe’s leaders are claiming a victory in the eurozone crisis after agreeing new deals that slash Greek debt and increase the firepower of the main bailout fund to around €1 trillion (£872bn). […] At one stage talks broke down with holders of Greek debt but they ended up accepting a loss or ‚haircut‘ of 50% in converting their existing bonds into new loans.“ Read more about the deal in the October 27, 2011 edition of The Guardian and in the full statement from the euro summit.

Euro Deal Leaves Much to do on Rescue Fund

„But key aspects of the deal, including the mechanics of boosting the EFSF and providing Greek debt relief, could take weeks to pin down, meaning the plan to rebuild confidence after two years of crisis could unravel over the details. […] Three months ago, euro zone leaders unveiled another agreement that was meant to draw a line under the debt woes that threaten to tear apart the 12-year old currency bloc. But they realized within weeks that it was inadequate given the depth of Greece’s economic problems and the vulnerability of their banks.“ More on the missing parts of the euro deal from Reuters.

Fate of Europe Hinges on Deal to Save Greece

„While European leaders are wrestling this weekend with plans to staunch the loss of investor confidence in their financial system, many economists believe the euro project is doomed unless the 17 member states take a giant step towards unifiying their budgets. „You can’t defy the laws of economics for very long,“ Australian National University’s Warwick McKibbin says. To those who say it is not possible to unscramble the egg and give nations back their own currencies, McKibbin says the same was held to be the case for the rouble zone in the Soviet Union. „People said a Soviet Union break-up was not possible, but it happened,“ he says.“ – David Uren of The Australian Business Review.

Euro Debt Crisis is Political Test for Bloc

„Anxiety about the health of the euro, which has spread from Greece to Portugal, Spain and Italy, is not simply a crisis of debts, rating agencies and volatile markets. The issue has at its heart elements of a political crisis, because it goes to the central dilemma of the European Union: the continuing grip of individual states over economic and fiscal policy, which makes it difficult for the union as a whole to exercise the political leadership needed to deal effectively with a crisis.“ Read the full article in the February 6, 2010 issue of the New York Times.

IMF to Advise Greece on Public Finances

„The International Monetary Fund inched towards greater involvement in Greece’s efforts to resolve its budget crisis on Monday, announcing that it will send a technical mission to Athens later this week. The mission will advise the Greek government on pension reform, tax policy, tax collection and budgetary controls but will not have any role in developing or vetting Greece’s fiscal consolidation plan.“ – The Financial Times about the plan of the IMF to get Greece back on track.

„The preliminary order of forfeiture filed in the US courts on Friday lists an apartment in Manhattan, a retreat in Long Island and a home in Florida, worth $22m in total, among the assets of Madoff and his wife, Ruth. Add to that two luxury yachts called Bull and two small boats called Little Bull and Sitting Bull. Throw in a couple of fur coats and crockery and cutlery valued at enough to fund an entire kitchen in most homes and the picture of their extravagant lifestyle is complete.“ Read more about the missing assets and investor funds from the Madoff Ponzi scheme in the June 30, 2009 issue of The Guardian.

Department of Justice: Bernard Madoff Sentenced to 150 Years in Prison

„Bernard L. Madoff was sentenced today in Manhattan federal court to 150 years in prison for perpetrating a Ponzi scheme that resulted in billions of dollars of losses to thousands of investor-victims… Prior to imposing sentence, Judge Chin heard from nine victims who testified as to the devastation Madoff’s fraud had caused to their lives and the lives of their families.“ Judge Chin: „No other white collar case is comparable in terms of the scope, duration and enormity of the fraud and the degree of the betrayal.“ For more details, see: full text of sentencing announcement from the Department of Justice

All Just One Big Lie

„But on Thursday, Madoff was charged with securities fraud after confessing to his sons that his business was a Ponzi scheme, according to a complaint filed by the Securities and Exchange Commission. The returns paid to investors came from money invested by other people. And there was almost nothing left. It may be the largest fraud in the history of Wall Street, authorities said.“ Read more in the December 13, 2008 issue of the Washington Post

Wall Street-Legende Bernard Madoff verhaftet

Many Nations Fared Even Worse Than U.S.

„Though it is the worst year in decades for U.S. stocks, American investors would have been better off keeping their money at home rather than plowing it overseas. […] Many nations fared even worse than U.S.; Germany shed 42%… The breadth and depth of the declines across global stocks this year illustrate how, in moments of extreme stress, markets tend to move in lock step.“ Read more in the December 1, 2008 issue of the Wall Street Journal.

Why Isn’t Everyone at Wall Street in Jail?

Matt Taibbi for The Rolling Stone: „The most amazing noncase in the entire crash […] is the one involving AIG and Joe Cassano, the nebbishy Patient Zero of the financial crisis. As chief of AIGFP […] Cassano repeatedly made public statements in 2007 claiming that his portfolio of mortgage derivatives would suffer „no dollar of loss“ — an almost comically obvious misrepresentation. „God couldn’t manage a $60 billion real estate portfolio without a single dollar of loss,“ says Turner, the agency’s former chief accountant. „If the SEC can’t make a disclosure case against AIG, then they might as well close up shop.“

$700 Billion Bailout Plan Wins Approval

For Stocks, Worst Single-Day Drop in Two Decades

„What had started 24 hours earlier, with a modest sell-off in stock markets in Asia, had turned into Wall Street’s blackest day since the 1987 crash. The broad market, as measured by the Standard & Poor’s 500-stock index, plunged almost 9 percent, its third-biggest decline since World War II. The Dow Jones industrial average fell nearly 778 points, or 6.98 percent, to 10,365.45.“ For the reactions and measures taken in Washington and around the world, read the rest of the article in the September 29, 2008 issue of the New York Times.

The $700 Billion Bailout Plan’s Fine Print

„Treasury Sec. Hank Paulson’s $700 billion bailout plan now has a name: the Troubled Asset Relief Program, or TARP. But even as Capitol Hill debates TARP, few seem to have noticed the proposal item that puts taxpayers on the hook for future bailouts. It’s in Section 6, and the key phrase is this: ‚The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time.'“ Read the rest of the fine print in the September 24, 2008 issue of Mother Jones.

Why the Government Wouldn’t Let AIG Fail

„After establishing a supposed hard line against bailouts over the weekend with Lehman Brothers, the government abruptly abandoned it Tuesday and announced an $85 billion Federal Reserve loan to insurance giant AIG. The explanation: AIG was deemed too huge (its assets top $1 trillion), too global and too interconnected to fail… The best case for the bailout seems to be that nobody has the faintest idea what the consequences of AIG’s failure for financial markets would be, but the fear was that it could lead to total chaos.“ Read the details of why the bailout happened in the September 16, 2008 edition of Time.

Lehman Files for Bankruptcy; Merrill is Sold

„But even as the fates of Lehman and Merrill hung in the balance, another crisis loomed as the insurance giant American International Group appeared to teeter. Staggered by losses stemming from the credit crisis, A.I.G. sought a $40 billion lifeline from the Federal Reserve, without which the company may have only days to survive.

The stunning series of events culminated a weekend of frantic around-the-clock negotiations, as Wall Street bankers huddled in meetings at the behest of Bush administration officials to try to avoid a downward spiral in the markets stemming from a crisis of confidence.

It remains to be seen whether the sale of Merrill, which was worth more than $100 billion during the last year, and the controlled demise of Lehman will be enough to finally turn the tide in the yearlong financial crisis that has crippled Wall Street and threatened the broader economy.“ Read the rest of the article about „one of most dramatic days in Wall Street’s history“ in the September 14, 2008 edition of the New York Times

How Wall Street Made the Mortgage Crisis Worse

„We believe we can show that some Wall Street bankers had evidence, […], that there were serious problems with subprime mortgage investments. Rather than wind down this business, they sped it up using financial trickery.“ – An enlightening report presented by NPR’s Planet Money and ProPublica on how Wall Street’s creation of the CDO (collateralized debt obligation) intensified the housing crisis. Listen to the NPR Fresh Air episode by the Planet Money team (7m23s) which aired on August 27, 2010.

Shares of Lehman Brothers Take a Beating

„Lehman Brothers, Wall Street’s favorite punching bag, took another beating on Thursday as jittery investors fretted over problems at home-loan giants Fannie Mae and Freddie Mac and absorbed regulators’ statements that they would not bail out all financial institutions. […] Lehman, once a leader in the now-battered mortgage market, is struggling against a tide of rumors, none substantiated but all magnified by fears about the true value of its assets that cannot be easily sold and the bleak prospects for its business in a weak economy.“ Read the whole article at The New York Times.

Supreme Court Refuses To Hear Armstrong Appeal

„Former trader and financial adviser Martin Armstrong, who is currently serving time in prison for a $1 billion fraud, will not get the chance to argue against a contempt conviction that added seven years to his sentence, after the U.S. Supreme Court refused to hear his appeal. The court denied Armstrong’s case on Monday, bringing an end to Armstrong’s fight against the contempt conviction, the sentence for which he has already served.“ Read the details of the Supreme Court’s refusal in Law360’s October 29, 2007 article.

Glut of Homes Hits 16-Year High

„The National Association of Realtors said sales by homeowners slipped to an annual rate of 5.75 million last month, down 0.2 percent from the revised 5.76 million pace in June… Not only did sales slip but the number of homes for sale jumped 5.1 percent, the group said, meaning there is now a 9.6-month supply of homes for sale, up from 9.1-months in the June reading. It was the biggest supply of homes by that measure since October 1991.“ Read the in-depth CNN report on what is now recognized to be one of the early major signs of the housing bubble.

»The deep slump in housing, combined with recent severe turmoil in financial markets, has raised worries about a possible recession.«

Home Prices Drop for Third Straight Quarter

U.S. home prices fell for their third straight quarter, according to an industry report released Tuesday. […] National Association of Realtors (NAR) President Pat V. Combs said in a statement that the flattening in home prices is encouraging. „It appears the worst of the price correction is behind us,“ she said. „More stable home prices and declining mortgage interest rates are increasing buying power, which should encourage potential buyers who’ve been on the sidelines.“ – Read the whole news piece at CNN Money.

7 Year Civil Contempt Sanction on Martin Armstrong Lifted

„The decision by Judge P. Kevin Castel of Federal District Court in Manhattan ends one of the longest-running cases of civil contempt in American legal history. It will finally pry Mr. Armstrong, 57, from the Metropolitan Correctional Center in Lower Manhattan, where he has been held since January 2000.“ New York Times, April 28, 2007.

Martin Armstrong Sentenced to 5 Years in Prison and 3 Years Probation

„Martin A. Armstrong, the financial adviser who has spent seven years in jail on a contempt-of-court charge, was sentenced yesterday to five years in prison for running what prosecutors said was a $3 billion Ponzi scheme. Judge John F. Keenan of the Federal District Court in Manhattan also ordered Mr. Armstrong, 57, to pay $80 million — plus one dollar — in restitution to the fraud victims… Ruling that the civil and criminal matters were separate, Judge Keenan chose not to credit Mr. Armstrong with the time he has already served. Instead, Mr. Armstrong will serve out his prison term after the civil case has been completed.“ Read the full article in the April 11, 2007 issue of the New York Times for more details on Martin Armstrong’s sentencing hearing.

Armstrong’s Forecast: Easy Money Bubble

„February 23, 2007, quietly came and went, and the Armstrong skeptics sneered. But it turned out that that day had seen some of the tightest credit spreads ever (that is, the easiest credit); home prices, meanwhile, had begun a sharp decline. It was the peak of the easy-money bubble—the edge of the precipice, the lip of the recession. That this became clear only in retrospect says as much about the perils of prediction as it does about a propensity to see, as the past recedes, patterns and narratives that flatter our particular angle on the world.“ Read more about Armstrong’s prediction in the New Yorker: The Secret Cycle.

New Judge Ordered in Armstrong Civil Case

„‚While we emphasize that we have never found any fault in Judge Owen’s skillful handling of this case, we believe that on the seventh anniversary of Armstrong’s confinement, his case deserves a fresh look by a different pair of eyes,‘ the appeals court said.“ Bloomberg, November 27, 2006

Armstrong Admits Japanese Fraud Role

„Former financier Martin Armstrong, who has spent six years in jail for defying a judge’s order, pleaded guilty yesterday to federal charges that he conspired to defraud Japanese investors out of millions of dollars. […] Armstrong, the former money manager and founder of Princeton Economics International Ltd., faces up to five more years in prison after admitting that he lied to investors about losses incurred by his fund in commodities futures trades. […]

No one has ever spent more time in jail for civil contempt of a federal court order. Keenan said he hasn’t decided whether to credit Armstrong for his time behind bars on the contempt citation when he’s sentenced on Jan. 3 on the conspiracy charge. Armstrong’s financial reputation was built on his theory that economic cycles recur over centuries. From an office overlooking Tokyo’s Imperial Palace, his now-defunct New Jersey-based firm grew to manage as much as $3 billion for Japanese investors.[…]

Armstrong has spent the past week in solitary confinement after being accused of damaging a prison vent.
Defense lawyer David Cooper said yesterday’s guilty plea doesn’t put an end to Armstrong’s civil contempt, which he is appealing. The decision on whether to end the civil contempt will be made later by U.S. District Judge Richard Owen in Manhattan.“ Read more in the Baltimore Sun’s August 18, 2006 report on the plea hearing.

5 pages of selected court transcripts: Martin Armstrong pleads guilty in a hearing before Judge John F. Keenan on August 17, 2006.

Thomas Sjoblom: „So you had a person who was indicted for 3 Billion Dollar Ponzi Scheme on Yen carry-trades on notes with Fannie Maes and exchange rate conversions that are hedged by futures contracts? Who’s going to even begin to grasp what we’re talking about?“

Die Amerikanische Vertrauenskrise

What Will Halt the Skid on Wall Street?

„Even for investors who lived through the bear market of the 1970’s, the relentless slide of stocks since March has been deeply disturbing. Markets rarely move in one direction, whether straight down or straight up. Yet for the last four months, stocks have plunged day after day, and week after week, climaxing with Friday’s 390-point drop in the Dow Jones industrial average.

Optimistic comments about the economy from Alan Greenspan, chairman of the Federal Reserve, and better-than-expected profit reports from some companies have not stopped the skid. Speeches by President Bush meant to reassure investors have instead seemed to frighten them. But if history offers one certainty, it is that the slide will not go on forever, and investors who have the fortitude to step in just when the market looks its worst will probably be rewarded.“ Alex Berenson in the New York Times

The Crash of 2002

„People worry that, with $7.7 trillion knocked off U.S. market capitalization since March 2000 ($750 billion in the past week alone!), the selling will bleed into the economy, not just snuffing the recovery but sending the country into a deflationary episode like the one Japan labors under. Or like the United States strained under in the 1930s.“ More about the context of the 2002 bear market is on CNN Money.

Republic New York Pleads Guilty to Securities Fraud

„The Republic New York Corporation pleaded guilty to fraud in federal court yesterday and agreed to pay $606 million in restitution for its role in a scheme that cost Japanese investors millions of dollars. […] In its plea, the company acknowledged that some of its employees overstated the value of assets in the accounts of Martin A. Armstrong, the New Jersey investment adviser who is awaiting trial on charges that he cheated Japanese investors. Those fake account statements covered up huge losses and allowed Mr. Armstrong to commingle client money to advance his scheme, prosecutors contend.“ Read all about the plea of Republic Bank’s lawyers at The New York Times.

Internet Bust Continues into 2001

„Another 53 Internet companies closed in June, bringing the total of dot-com sector companies to shut down over the past year and a half to 555 or more, according to Webmergers.com. Webmergers.com, a San Francisco provider of information about buying and selling Internet companies, (www.webmergers.com), has been tallying Web casualties for months. It said the first half of this year has been especially brutal.“ Wall Street Journal, July 5, 2001

Pets.com Latest High-profile dot-com Disaster

„Pets.com is only the latest Internet company to join the dot-com death watch. Monday, Furniture.com said it had shut down, and earlier this month, male lifestyle site TheMan.com closed down its site. In recent weeks, Beautyjungle.com, Eve.com and BigWords.com have either closed their doors or laid off staff. „I think that the most interesting thing about this is the rapid collapse of an entire industry,“ Gomez senior analyst Matt Stamski said. „I think it’s unprecedented in this recent shakeout.“ […]“ Read more on CNET.

From dot.com to dot.bomb

„Markets notoriously overshoot, in both directions. So, it seems, can dot.com obsessions. For much of the past three years, shares in Internet firms have climbed stratospherically, regardless of whether they were making any profits or even any sales. The future promised land, it was felt, was all that mattered. But now the price of Amazon.com, the most famous e-commerce pioneer of them all, has tumbled. Some investors seem to have decided suddenly that nobody will ever make any money from commerce on the web, so they are dumping almost all their dot.com shares.“ Read the full article in the The Economist on June 29, 2000 issue.

Four Different Reactions to One of the Worst Days on Wall Street

„Both the Dow and the NASDAQ logged their biggest single-day losses ever on Friday. The Dow Jones industrial average declined 617.78 to 10305.77, a loss of 5.66 percent, while the NASDAQ composite index went down 355.49 points, a loss of 9.67 percent. Here are some reactions to the bloodbath: […]

Clearly, the bubble has burst. I think things will never be the same. I think a lot of the Internet companies that shouldn’t have gone public have been found out and you won’t see them go back up. What’s happened is a lot of people have lost a lot of money. I think it’s going to scar people for a long time, and they’re going to realize that it’s now back to fundamentals. It’s back to rationality.“ Explore the different perspectives on this historic and troubling day on Salon.

Nasdaq bricht neuen Rekord (schon wieder)

The Beginning of 7 Years of Civil Contempt Imprisonment

„On Jan. 14, 2000, Martin A. Armstrong, a globe-trotting investment manager, was told to produce $15 million in gold and antiquities, as well as documents, in response to a civil suit by the government accusing him of securities fraud involving hundreds of millions of dollars.“ Read a detailed report on Martin Armstrong’s case in the February 16, 2007 edition of the New York Times.

Edmund Safra, Founder of Republic Bank, Killed in Fire

„Edmond J. Safra, a multibillionaire who built a banking empire that specialized in catering to the very rich, suffocated in a predawn fire on Friday in his luxury duplex penthouse here on the Riviera, and the local authorities said the fire had been set by two hooded intruders.“ Read more in the New York Times‘ article on this event and in Edmund J. Safra’s obituary in the same issue.

Bank of New York Ex-Employee Charged in Russian Case

„Federal authorities arrested a former Bank of New York employee yesterday on charges of making false statements to investigators in a money laundering inquiry involving the bank and its clients in Russia. She entered a plea of not guilty.“ Read all at The New York Times.

Activity at Bank Raises Suspicions of Russia Mob Tie

„Billions of dollars have been channeled through the Bank of New York in the last year in what is believed to be a major money laundering operation by Russian organized crime, law enforcement officials say… From October through March some $4.2 billion, in more than 10,000 transactions, passed through one account, investigators said.“ Read more in the August 19, 1999 edition of the New York Times.

U.S. Says Russia Probably Misused Funds From IMF

„The Treasury Secretary, Robert E. Rubin, told a Congressional panel today that he suspected that much of the $4.8 billion in loans sent to Russia last summer by the International Monetary Fund ‚may have been siphoned off improperly‘ […] In this case, however, the capital flight may have helped buy time for a group of Russia’s most powerful business executives, who wanted to convert their rubles to dollars before the ruble was devalued. […]

The money from the fund went to the Russian central bank. And the bank spent it to intervene in the markets and buy rubles for several weeks. Some money may also have been provided to banks, giving their clients access to dollars in return for ruble deposits. The result was that the $4.8 billion was quickly drained away, and a similar amount appeared in overseas bank accounts. This only could have been avoided with capital controls, rules that prevent taking money out of the country, which the United States has rarely supported in recent years.“ For more on U.S. officials‘ concerns, read the full article at the San Francisco Chronicle.

Russians Assure Clinton They’ll Pursue Reforms

„In an apparent effort to calm jittery investors worldwide, officials from both countries stressed Russia’s continued commitment to economic progress. But given the resistance to both Yeltsin and Chernomyrdin in the Communist-dominated Duma–the Russian parliament’s lower house, which has already rejected Chernomyrdin’s nomination as prime minister once and is demanding that Yeltsin surrender to it a greater share of political power–there was no guarantee that the Russian leaders have the power to back up their rhetoric with action.“ Read more about Clinton’s visit to Russia in the September 2, 1998 edition of the Los Angeles Times.

Years of Bad Advice Culminate in Russia’s Total Economic Collapse

„The most immediate and dramatic result of the Crash of 1998 was the virtual collapse of Russian banking. The government imposed a two-month freeze on withdrawals from the country’s six largest private banks. With the ruble dropping precipitously in value every day, ordinary Russians were forced to watch in horror as the money in their bank accounts lost its value. […] With prices rising uncontrollably, retail stores were forced to close repeatedly throughout the day, just to figure out how much to charge. Even those Russians who had become accustomed to the occasional Western product were forced to do without, as the price of imports soared beyond their reach.“ Read the chapter on the 1998 economic collapse from the report Russia’s Road to Corruption by the U.S. House of Representative’s Speaker’s Advisory Group on Russia

Russia’s Black Thursday

„Calls for a currency devaluation and dwindling cash reserves sent the Russian stock market into a meltdown Thursday, causing a halt in trading for 35 minutes and prompting the local press to dub the day ‚Black Thursday.‘ […] The Russian Trading System electronic exchange plunged 15 percent in the first 40 minutes of trading before being halted. The index closed Thursday down 7 points at 101.17, off nearly 6.5 percent.“ Read CNN’s full article on this disastrous day for Russia.

Russia Gets $22.6Bn IMF Aid

„US President Clinton has welcomed the International Monetary Fund’s decision to give Russia a $22bn loan to help it stabilise its economy. […] In return the Russian government has promised to stop issuing short-term government bonds, which helped it over recent cash flow problems, but carried very high interest rates which are draining the government’s coffers.“ Read the whole news article at BBC News.

Russia’s Financial Crisis Worsens

„Russia’s main stock index sank 10.2 percent, continuing a massive investor flight from the country’s markets that has aroused fears of a collapse in the ruble and political tumult in the giant nuclear power. Yesterday’s decline came despite an unusual Sunday statement from President Clinton pledging that the United States would support an international rescue package beyond aid already in place.“ Explore the context of Russia’s predicament in the June 2, 1998 edition of the Washington Post.

Tokyo’s Stock Bubble

„Japan’s stock market spawns two kinds of investors: believers and skeptics. The believers are getting rich. The skeptics are getting sore,“ reporter Marcus W. Brauchli wrote in an article published Jan. 2, 1990. „Even cautious predictions call for the Nikkei Index to end 1990 above the 45000-point level, climbing from its 1989 close of 38916. […] After moving relentlessly and often precariously higher for five years, Japan’s stock market seemingly has collided with a new reality.“ Read more on the collapse of the Nikkei at the Wall Street Journal.

What Happened to the Nikkei in Japan?

„Economic historians usually date the beginning of the bubble economy in September 1985, when Japan and five other nations signed the Plaza Accord in New York. That agreement called for the depreciation of the dollar against the yen and was supposed to increase U.S. exports by making them cheaper. But it also made it cheaper for Japanese companies to purchase foreign assets. And they went on an overseas buying spree, picking off properties like the Rockefeller Center in New York and golf courses in Hawaii and California. […] By December 1989, the benchmark Nikkei 225 stock average had reached nearly 39,000. But beginning in 1990, the stock market began a downward spiral that saw it lose more than $2 trillion by December 1990, effectively ending the bubble era.“ Visit the Japan Times for more „lessons from when the bubble burst,“ starting a decade of economic recession.

„The Japanese obliged and their own capital contraction led to the next bubble top at the peak of the 8.6-year cycle that was now due 1989.95. As the Japanese took their money home for investment, the value of their currency rose as did their assets thereby attracting global investment as well. Everyone was there in Tokyo in late 1989. Just about every investment fund manager globally was touting the virtues of Japan.“

Hard Landing in Tokyo

„Japan’s multitrillion-dollar speculative bubble pops. […] Throughout the 1980’s […] the accepted wisdom in Tokyo was that the property and stock markets could not plummet, no matter how overvalued they became, because „Japan Inc. would never let it happen.“ In fact, „Japan Inc.“ is not nearly as monolithic as many, in the West as well as in Tokyo, would like to believe. When the supports that were holding up the speculative boom got kicked out one by one, with a tightening of credit and a sudden ending to Japan’s free-spending ways, the markets began to tumble.“ Read more at the New York Times

Japan’s Investors say The Best May Be Yet To Come

Long Honeymoon Ends For Investors in Britain

„Millions of Britons who had bought stock since 1979, when Margaret Thatcher came to power pledging to make Britain a nation of shareholders, were rudely introduced this week to the notion of market risk: prices go down as well as up. […] Now, despite an 8 percent rebound in London share prices today, stock market analysts predict that the unprecedented 23 percent slide on Monday and Tuesday will leave these investors leery, undermining the Government’s efforts to increase share ownership. No Longer a ‚One-Way Deal'“ Read the whole article at the New York Times.

Stock Market’s Frenzy Puts Fed’s Greenspan in a Crucial Position

„Just a few days ago, Mr. Greenspan was under pressure from the financial markets to increase interest rates and prove his willingness to fight inflation. But by yesterday, the focus had changed dramatically. After Monday’s unprecedented market crash, traders and analysts were calling on the central bank to ease credit to avoid recession. […] But the market’s nose dive could change those fundamentals substantially. In just a week, the market has wiped out — on paper — nearly a trillion dollars of wealth. Among those who were hard hit, that is likely to damp enthusiasm for spending money on houses, cars, furniture and appliances. And lower stock prices will hobble businesses trying to raise the money needed for capital investment.“ Read the whole article at the Wall Street Journal.

A Happy Birthday for the Bull

„The Dow Jones industrial average celebrates the fifth birthday of a gigantic bull market today and its top-performing stocks during this period continue to draw praise from analysts. […] At its latest reading, the 243.58 percent advance over five years represents the third-best showing of any bull market in the 20th century. Top billing goes to the 371.62 percent gain that occurred between July 8, 1932, and March 10, 1937, as the nation emerged from the Depression. And the economic expansion after World War I carried the Dow ahead 331.53 percent between May 20, 1924, and Sept. 3, 1929, right before the stock market crash that October.“ Read the whole report on the bull market at the New York Times.

For $33.50, You can Have a Minute with This Commodities Adviser

The Wall Street Journal in a short piece about two commodities advisers. One of them is Martin Armstrong: „Mr. Armstrong says his strategy, is based on enduring values, like fear and greed. ‚Our cyclical analysis works because it is totally based upon human emotions,‘ he says. ‚That is what moves markets. Human emotions are there for every inflationary spiral and deflationary collapse.'“ Martin Armstrong has a copy of the article on his blog.

PLO leader forced to leave Beirut

Hostilities Between Israel & PLO Resume

„On June 6, 1982, the Israeli Defense Force, following the directions of Ariel Sharon, Israeli Defense Minister, launched a large scale invasion across the northern border into Lebanon. The invading force consisted of nearly 60 thousand Israeli soldiers organized into 9 division sized formations and supported by portions of the Israeli Air Force and Navy. The announced purpose of the attack was to push back those elements of the Palestine Liberation Organization (PLO) operating in southern Lebanon to a distance 40 kilometers north of the border between Israel and Lebanon 50 that Israeli settlements and villages of northern Galilee would be beyond the range of PLO artillery.“ Read the full Quantico report on GlobalSecurity.org.

U.N. Spokesman Says Guns and Tanks Push North Across Border

„The United Nations Security Council, meeting in an emergency session at Lebanon’s request, issued a unanimous call for a ceasefire between Israeli and Palestinian forces. A United Nations spokesman said some Israeli tanks, artillery and armored personnel carriers had moved into the enclave in southern Lebanon controlled by Christian militiamen. […] The state-run Lebanese television reported that „casualties were heavy but it is impossible to establish exact numbers.“ The television said a total of 60 people were killed and 200 wounded in Friday’s Israeli air raid on Beirut.“ Read the full New York Times report.

Stocks Collapse, But Rally At Close Cheers Brokers

The New York Stock Market Crash of 1929

„As the story goes, the opening bell was never heard on Black Tuesday because the shouts of ‚Sell! Sell! Sell!‘ drowned it out. In the first thirty minutes, 3 million shares changed hands and with them, another $2 million disappeared into thin air. Phone lines clogged. The volume of Western Union telegrams traveling across the country tripled. The ticker tape ran so far behind the actual transactions that some traders simply let it run out.“ Read the entire „Brief History of the Crash of 1929“ in Time.

Brokers in Uproar as Market Boils

„1,000 Mill Madly on Floor of Exchange and Thunder of Voices Is Heard Outside. Furious Pace Before Gong. Then Perspiring Traders With Torn Collars Stand Limply or Jump and Laugh. Crowds Surge In Street. Movie Men Take Pictures of Excited Throngs–50,000 Clerks at Work as Wall St. Stays Up All Night. Brief Silence Follows Gong. Clerks Labor Into Night. Brokers Were Prepared. Crowds Gather Outside. Gallery Is Thronged. Speculators Watch Boards“ Read the whole intense report from the Wall Street floors at the New York Times.

The Crash Ushered in the Great Depression

„Throughout the 1920s a long boom took stock prices to peaks never before seen. […] Many investors became convinced that stocks were a sure thing and borrowed heavily to invest more money in the market. […] But in 1929, the bubble burst and stocks started down an even more precipitous cliff. […] This had sharp effects on the economy. Demand for goods declined because people felt poor because of their losses in the stock market. New investment could not be financed through the sale of stock, because no one would buy the new stock.“ Read more in PBS „The First Measured Century“

The Pigeon King and the Ponzi Scheme That Shook Canada

„Galbraith’s reign as Pigeon King lasted seven years, from 2001 to June 2008, when his empire imploded. The prosecution likened his company, Pigeon King International, to a Ponzi scheme — much like Bernard Madoff’s operation, which happened to crumble just months after Galbraith’s, except that where Madoff’s scheme centered on stocks and securities, Galbraith’s used live birds. Pigeon King International sold breeding pairs of pigeons to farmers with a guarantee to buy back their offspring at fixed prices for 10 years.“ Read more about an infamous Canadian Ponzi scheme involving pigeons in the New York Times Magazine, March 6, 2015

Boston Post Reveals Ponzi is a Convicted Forger

„On August 11, the Post revealed that Ponzi had been convicted of forgery at a scandal-ridden bank in Montreal the decade prior. The next day, Ponzi surrendered to federal authorities. […] His investors received less than 30 cents to the dollar on their investments. Losses totaled $20 million — about $225 million in today’s dollars.“ Read or listen to the whole story (5:23) in WGBH: „The Boston Post Takes Down Charles Ponzi„

Verdoppeln Sie Ihr Geld in Drei Monaten

How the Ponzi Scheme Got Its Name

„Charles Ponzi, a dapper, five-foot-two-inch rogue… raked in an estimated $15 million in eight months by persuading tens of thousands of Bostonians that he had unlocked the secret to easy wealth. Ponzi’s meteoric success at swindling was so remarkable that his name became attached to the method he employed, which was nothing more than the age-old game of borrowing from Peter to pay Paul. The rules are simple: money taken from today’s investors is used to pay off debts to yesterday’s investors… The problem is that there is no actual investment going on; the only activity is the shuffling of money from new investors to old ones. Everything is fine until the scheme runs out of new investors and the whole house of cards comes tumbling down.“

Injunction Against the Gold Board Issued by Judge Cardozo

The Gold Panic of 1869

„In an effort to corner the gold market, speculators, including Jay Gould and James Fisk, sought the support of federal officials of the Grant Administration in order to push the price of gold up before the US government returned to the gold standard after the Civil War.

The intent of the scheme was to force the government to accept whatever free market price gold would reach on the open market as traded on the New York Stock Exchange at the time. The ‚gold-ring,‘ as came to be known, planned to corner the market forcing the price of gold higher and in the end, their intended exit strategy would be the government itself. […]

Fisk and Gould probably made a profit of about $11 million by their manipulations, but many claimed to have been ruined by the panic. The name Black Friday has lived on in history ever since. Today, the term “Black” has been used to describe numerous financial panics around the world despite the fact that only prices have fallen.

The Gold Panic of 1869 was by far the strongest rally of all time even surpassing the rally of 1980. Gold would eventually peak in September of 1869 only after making a substantial ten-fold rally as reported by the NY Times on September 24th, 1869.“ Read Martin Armstrong’s analysis of the panic of 1869, a key event in unlocking his understanding of the business cycle as cyclical, not linear.

The Scene on the Trading Floor

„The bear party at times seemed to be perfectly frantic while undergoing punishment at the hands of the exultant and defiant bulls; and as the roar of battle and the screams of the victims resounded through New-street, it seemed as though human nature was undergoing torments worse than any that Dante ever witnessed in hell.“ For the entire account of September 24, 1869, the day that would become known as the first Black Friday, read the full article in the New York Times archive.

Diocletian’s Monetary Reform

„Diocletian attempted to reestablish the base unit of the monetary system – the denarius. A new silver denarius was issued with about the same weight and fineness of that of the denarii during the reign of Nero – 96 to the pound (3.41 grams). It appears that this coin was simply called the argentius meaning silver. In documents that have survived from this period, it is clear that there are references made to ‚denarii‘ and ‚argentius denarii‘ stressing the difference in obvious value.“ Read more about Roman Emperor Diocletian’s currency reform and price controls in Martin Armstrong’s „Monetary History of the World.“

Inflation and the Fall of the Roman Empire

„But the real crisis came after Caracalla, between 258 and 275, in a period of intense civil war and foreign invasions. The emperors simply abandoned, for all practical purposes, a silver coinage. By 268 there was only 0.5 percent silver in the denarius. […] Prices in this period rose in most parts of the empire by nearly 1,000 percent. The only people who were getting paid in gold were the barbarian troops hired by the emperors. The barbarians were so barbarous that they would only accept gold in payment for their services. […] The situation did not change until the accession of Diocletian in the year 284. Shortly after his accession he raised the weight of the gold coinage, the aureus, to 60 to the pound — this was from a low of 72.“ Read the full transcript of Professor Joseph Peden’s lecture for Mises Institute.

The Decline and Fall of the Roman Denarius

„The basic silver coin of the early Roman Empire was the denarius. By decree of Caesar Augustus in 15 B.C.E., it was nearly pure silver, 95%-98%, and had a fixed weight and value in relationship to the rest of the Roman monetary system. Over the next 270 years, the silver content of the denarius declined gradually and then precipitously to about 2%. This degradation occurred more rapidly in the provinces than in Rome […] The final stage of the denarius was a duplex plated coin with a nearly copper core and a silver surface. This produced a lower-cost coin with an apparent value equal to the previous ones.“ Materials Characterization, Volume 29, Issue 2, September 1992